welcome to "bloomberg daybreak." the tone of the markets looks like this. futures positive throughout the morning so far. the dow at 35. day,is ecb mario draghi the euro a july low. in just about 45 minutes come of the european central bank will release its latest policy decision. the central bank is widely -- thed to hold on rates future of draghi's stimulus program. we will bring you the right decision at 7:45. theresa may attends her first european union summit as the u.k. prime minister later today. challenges.es other donald trump and hillary clinton

faced off in their third and final debate before the november election. trump refused to say whether he held honor the result if were not declared the winner. clinton holds a nine point lead over trump. let's continue on that lead story of the debate last night where donald trump refused to say that he would concede even if he does lose on november 8. >> what i'm saying is i will tell you at the time, i will keep you in suspense. >> that is where fine. thingsime donald thinks are not doing it his direction, he thinks whatever it is is rigged against him. david: joining us from las vegas is megan murphy. i don't think you've had much sleep. all the news reports of this debate league with this exchange where he would not concede.

tell us why that is so significant. one, it builds on a theme that donald trump has been pushing over the past two weeks, that this election is rigged. he means he feels the media is biased against him and that has led to a rigged election in terms of the information people are getting. he also hit hard on the issue of voter fraud despite every survey and study showing the incidence of voter fraud is incredibly low. he is making the case to americans that their vote may not count. that is a very worrying thing. like lindseyres graham and marco rubio, his own running mate, mike pence telling bloomberg in an interview just prior to that debate that he should and will support the results of this election. let's play a bit of that interview with mike pence.

and kellyanne conway after the debate. not disappointed -- i thought it was an amazing debate. donald trump will accept the results because he will win the election. jobs, trade commission migration -- --de, immigration david: what affect does this have on the presidential campaign and on down ballots? it's not helpful to have your lead candidate say it's all a fraud, it's all going to be rigged. it is a two fold question. in part, donald trump thinks this fits into his narrative of being an outsider, a disruptor in washington.

if you can paint the system is being rigged, that would galvanize people who feel left out of america's recovery. when you challenge the court fundamental principles of american democracy, you are playing with dangerous fire re.ir the moderator did a masterful job of keeping people on message last night. he reminded people that their vote does count and to doubt that and to doubt our system calls into question the very system we live under. was a powerful moment in summing up how powerful this debate is. david: a lot of the focus on the pyrotechnics in the back-and-forth. it was a lot of substance and chris wallace did a terrific job. out thatn initial pull

poll out, 40% think donald trump won. -- he was able to pivot. he was able to separate his message from hillary clinton. appling has consistently showed strongestis his theme with voters. that is the block you would need to move, people on point -- by telling people that hillary clinton's economic plan will make you pay higher taxes, his plans will add jobs to our some companiesse to bring their offshore earnings back if the compelling message consistent --

david: that's megan murphy come our washington bureau chief. the other top story comes in 40 minutes time. the ecb wrapping up its two-day meeting in frankfurt. decision.t a policy caroline hyde is in frankfurt with the latest. caroline: it's like the weather in frankfurt. damp in 40 minutes. no known change, that's what whatever percent of the economists we spoke with believe. -- 100% of the economists we spoke with believe. boughtion euros of bonds passed march -- there's much hope in the market that they will make it easier to buy the

debt out there. 40% of german debt is what you are able to buy at the moment. the rest is unavailable. the banks have been rallying in europe. up because of the belief that they will steepen the yield curve. miniwe had this strong taper tantrum. how did you navigate that today? notline: he says this is discussed by the governing council. that's what many of the analysts ,hink it goldman sachs, ubs because notably, they are trying to go up the potential of stimulus.

on one side, you have the germans wanting to talk about the end of quantitative easing and tapering insight. -- in sight. with inflation will below the 2% level and notably growth at 1.3%, this is no time to be raining backs thomas. reinig back stimulus. jon: mario draghi is like father christmas. you have to wait until december and hope they don't draw attention. it inflation hit that 2% target? if it's 2019, that will tell you something about their program as well. david: it's all about confidence. the ecb having confidence, the market having confidence. we believe in the economic growth? jon: that is the big picture.

coming up, the decision and the news conference right here on bloomberg television. courtney: the philippines president says it's time to say goodbye to the u.s.. china for talks with he said thatnt -- there will be "no more american interference." the typhoon roared ashore with winds of 115 miles per hour. at least eight people were killed. newu.s. will deploy a missile defense system in south korea. as soon as possible. but according to john kerry who spoke in washington after meeting with south korean security officials. south korea says north korea's latest missile test firing appears to have failed.

global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney collins. alix: you have u.s. equity futures inching higher, relatively flat over in europe. in europe, nestle off by .6%. the second largest drag in euro stoxx 50. cutting is forecast for the year , only sales growth of 3.5%. they had a higher pricing strategy, but that backfired, particularly in emerging markets. the ceo saying he will focus more on adding volume, backing off that pricing mechanism. ebay earnings after the bell yesterday, down over 7%. company has a cautious outlook for the key holiday season. not raising some red flags for investors. that raising some red flags

for investors. the qualities that they did see in earnings, they are seeing some weakness in their large corporate accounts. much of that earnings beat came from cost cutting expenses. coming up, u.k. prime minister theresa may is headed to brussels for her first ever eu leadership summit. the mosty not be pressing issue for the union. we will explain why. we're just over 30 minutes away from the ecb rate decision. we will bring you that come 's newsplus, mario draghi conference at 8:30 new york time. ♪

jon: new york city, this is "bloomberg daybreak ." we count you down to the cache open in york and ecb decision. the other asset classes, this is the picture right now. yields up about one basis point. still stable around a july low. more on what the market might be expecting, ubs global chief economist paul donovan joins us now. we begin with a look back at the last news conference when mario draghi said we did not discuss the extension of qe. can he get away with that this time around? paul: he may be able to. something we will discuss this in march. certainly, there doesn't seem to be a rush to discuss this phase.

we have quite a bit of time before the current program comes to an abrupt conclusion. this is a story -- jon: if they extend qe, the consensus is they have to extend qe and tweak the rules. if the pool of assets shrinks, maybe 50-60 has the same effect. why is 80 and getting there so important? is addictede draghi to easing. he needs to mainline media month. there is a signaling effect. mainline 80 a month. where inflation is picking up, the concept of the taper is not some that we should rule out at all. need toat does draghi

do to outline that september is coming? he has to talk about the underlying fundamentals of the economy. the fundamentals are all right. the bank survey that came out earlier this week was signaling banks are lending. that is an important part of the process. ifs basically telling people we do taper, we are tapering for very good fundamental economic reasons. the survey said the debt was used for restructuring, not being used to invest. paul: we have a real problem with investment -- it's a big phenomenon here. the way we work has changed. before i came here, i was sitting in my hotel room and working away on my ipad. ubs's ipad. consumereased my

purchases -- we are more productive. still, it is not showing up in the investment data. i'm very dubious about putting too much stress on modern statistics these days around investment. david: sooner or later, there will have to be tapering. what effect will it have on the value of european assets? how distorting is this addiction you describe on asset valuation? paul: it's a slightly awkward question because what we have -- bond market is raped. rigged. bond market is what will be the balance between financial repression, ordering institutional investors to go in bondsand by government versus the ecb choosing to go in

and buy government bonds? that will support the bond market even as the ecb scales back. we also have to consider the third pillar, bank regulation. this is european high-yield spread versus impressment -- investment-grade spread. we are continuing to see tightening in the high-yield market. the yields have backed out -- there is a message for president draghi. they like the backup in yields, they like the wider spread and steeper curves. when does that become a policy for them to look at that and say we need to have the banks? paul: politically at the moment, it's difficult to come out with the words we must help the

banks. has to be doing is recognizing -- he has heard from the banks with negative rates. how does he balance the costs of the banking system with negative rates with the desirability of a steeper yield curve? one thing we may be starting to hear more and more about is that there will be no further move into negative rates. central banks have suddenly woken up to the fact that negative rates are not a stimulus, they are a tax. --x: alessio de longis is paul donovan is sticking with us. mario draghi's news conference

at 8:30 eastern time. theresa may has her first eu leadership summit in brussels today. will the newcomer get a warm welcome? what do you leaders want to hear -- eu leaders want to hear? ♪

david: this is bloomberg. brussels todayin for her very first meeting of the european council ahead of the british government. this is also the first meeting 's the council since miss may country voted to leave the european union. what will be the reaction to miss may as she arrives and how much will be about brexit? to in eu leaders i spoke the welcome of

theresa may in brussels may be -- if she keeps the approach she had earlier this month where she called for a hard brexit. i just spoke with the finnish prime minister. he told me that you will keep a united front with brexit. whatat are the targets and is the process? we have not set our targets yet. it's after we hear the process timeline. according to two senior british officials we have spoken with, theresa may is expected to say there is no turning back from brexit, there will not be a second referendum. i just spoke with the luxembourg prime minister who told me you

are either married or not. the u.k. has asked for a divorce. thed: the elephant in corner that no one will ignore. there are other things on the agenda? you leaders don't want to wait for the political energy -- this is not officially on the table. they will speak about it at dinner for 10 or 15 minutes. they want to make decisions on ,igration, the migration crisis these refugees that keep coming from the central mediterranean route and russia and the situation in syria. alix: prime minister theresa may will reinforce that the u.k. were not back down from its brexit vote. an interesting analogy

pre-brexit earlier today. in a cold you are winter and you are freezing and at some point, your house catches fire. you are happy because of the rise in temperature. this is what we are seeing across the government and with decision-makers. alix: still with us is paul donovan. do you see it like that? paul: that's a little bit extreme. there are some positive developments, but there is a delayed reaction. it is late that we will see pricing and other developments. this applies try to push up prices, is that something to be positive about? paul: there will be resistance. on the other hand, we see some prices going up. won't go up by some.

inflation in u.k. is a one-way bet. , good to haveovan you. draghi's news conference at 8:30 eastern time. this is bloomberg. ♪

alix: this is "bloomberg daybreak." it is 7:30 a.m. on wall street. in just a few minutes, the

european central bank will release its latest policy decision. the central bank is expected to hold fire on rates. the future of mario draghi's stimulus program, we will bring 7:45.at news at theresa may will attend her first eu summit as u.k. prime minister. u.s. presidential candidates donald trump and hillary clinton faced off in their third and final debate before the november election. trump refused to say whether he would honor the election result of you were not declared the winner. clinton holds a nine point lead over trump. alix: this is how the market is capturing those stories at the moment. --: futures up 28 points

marginal gains there. bonds on offer at the margin, yields up a basis point on the 10 year. at 1.0 89. david: we have a morning must watch today. thedramatic debate between two principal candidates for president. amount ofa fair substance addressed by both hillary clinton and donald trump. mr. trump had an extended discussion about his plan for economic growth. even conservative economists who have looked at your plans and the numbers don't add up. idea, you talked about 25 million jobs created, 4% growth is unrealistic.

you talk about growing the energy industry -- >> i just left a semi-representatives of india. china is growing at 7%. that come up for them, is a catastrophically low number. our last report came out, we are growing around 1% level and i think it is going down. david: joining us now is mike mckee. was a fair amount of substance here addressed by both of these candidates. take us into it. what difference would it make for the u.s. economy if donald trump were president versus hillary clinton? a huge difference according to folks who vandalized these things. the most recent studies adjusting trump's plan would create jobs in the short run.

over the longer run, it would cost jobs. the opposite happens with hillary clinton. in the shorter run, because she raises taxes and cuts more spending, you will have a slower pace of growth. and beyond, greater growth. the clinton plan would raise gdp above its baseline by .4%. other people will say it doesn't cost as much as you just said -- we are underestimating the amount of growth they would give us. it's a very hard to evaluate the trump plan because -- it is detail free. he doesn't clarify a lot of what he's going to do. years out, no economist will be able to tell you what's actually going to happen.

on the meantime. there's a lot of misconceptions in trump's plan about trade as well. he rails against the chinese but chinese imports are actually going down. not going up. 30% of the content of mexican imports into the u.s. through nafta is products made in the u.s. of his a lot of analysis plans that try to take those things into account. alix: when you take into account what he said in the debate, comparing the u.s. to india and china, those are emerging markets. they are supposed to be growing at 8%, and i present. -- 9%. is growing more slowly than it has historically and growing more slowly out of a recession. the say different kind of recession.

yous a financial recession, will have slower growth. you cannot compare the percentage gains as you said for emerging markets. they're coming from such a low -- we hope the u.s. can get to growing more quickly, but it doesn't compare to china. one of the things mr. trump says is if we cut back on regulation, we will get growth from that. hillary clinton has given no indication that she's interested in that. mike: you look at the service going back years, 50 years, they always cite regulation as a headwind. the obama administration has increased regulation. it's hard to quantify. part of the problem with the trump plan, he doesn't say what regulations he would cut. what does that actually mean for the economy?

how do you measure it? you talk about cutting regulation, you have to balance the other side. suppose you take steel plant and say we are going to cut regulation, you don't have to have scrubbers. what about the guy who makes the scrubbers? david: that is mike mckee. we now have an opportunity to hear directly from mr. trump's principal economic advisers. professorrro is -- he literally wrote the book. 36 pages, i read it. was the most painfully ignorant three minutes i've ever had to sit through.

someone who wants to talk to financial investors would have if i views -- let me see can deconstruct some of this thing. let's talk about growth. from 1947-2001, we grew at 4.5% gdp. we can do that again. what we have done since 2002 is grow at 1.i percent. that's 1.5%. we are down about 20 million jobs, about what we need to put all the people back to work. david: can you get to it? peter: the defeatism is astonishing. the best we can do with hillary clinton is less than 2%. about going to china levels, we are talking about going back to our historical norm.

how do we get there? wantse one candidate who to do four things, cut taxes, reduce regulation, eliminate the coal deficit and let our and oil industries produce for american businesses. all four of those things point in the direction of growth. taxes would be cut for the wealthiest americans. that? why do you say there's tax breaks for everybody who pays taxes right now. taxes.ng corporate which, to me, is the most important thing. let's talk about corporate taxes. people want to know why our companies, gm and ford would prefer to invest in mexico or china rather than in michigan, ohio, pennsylvania and north

carolina. rateve a 35% corporate tax whereas the rest of the world has tax rates that we trade with down in the 20's. you go offshore, you immediately get a tax break. spin? you buy into that everybody gets a tax cut. david: i want to take the facts -- i just interviewed mark feels. i would doing some investment in mexico? absolutely we are also investing in michigan and ohio. peter: go look at the data on our nonresidential fixed investment trends. once we hit 2002, that dropped dramatically. more profitable for

companies to go there than to stay here. the biggest part of the trump plan is a limited trade deficit. illuminating the trade deficit. , we cant one more point go to at least 3%. the question is, how do we get there? rhetoric irough this had to painfully sit through come it's through doing things intelligently. we have six trading partners where most of that deficit is -- germany, japan, south korea, mexico, china. .e have cut bad deals saidon the hillary clinton this is a cutting edge deal with south korea, let's sign it. and promised 70,000 jobs

trade deficit neutral. now, what do we have? we've lost 100,000 jobs, we see now exports -- the needle did not move. andoubled our trade deficit most of the job losses were in the auto industry in places like michigan. you tell me that donald trump can do a better job of negotiating that or nafta or the tpp. we are giving away our factories and our jobs and people sit here and say we can't do it. alix: what about the ecb decision? --: michael mckee will have mike: donald trump said we are losing our manufacturing base and not making anything he more. from 1919, we are making as much as we ever do --

peter: we've lost the 70,000 factories. mike: we are using fewer people to do it because companies are using more robots. peter: they have 20% of their workforce -- mike: sounds like the debate last night. we are still making stuff in this country. we are doing it with fewer people. much of that has to do with automation as opposed to jobs moving overseas. peter: that's not what they think in fort wayne and scranton. i've been all over the rust belt. the data is clear and you can take the jobs but germany has 20% of their workforce and manufacturing, japan has 17% and we have, what

-- 8%. gave away the score in bad trade deals and we have to stop this defeatism. we have to get to 3.5% growth. if donald trump can bring back the jobs, how does he do it if the jobs are going away to robots? peter: japan and germany are the highest robot countries in the world and they each have 20% of their -- this is defeatism. where a white shirt and run up the white flag. david: are you denying that more jobs are lost to automation? peter: automation and demographics are part of the equation. the biggest part of the american equation right now is stupid trade deals like hillary clinton put 100 thousand

people out of work because she cannot negotiate a good deal. we have an decision coming up in a minute. an ecb decision coming up in a minute. we reached out to hillary clinton's campaign -- we have not heard back yet. growth.t less than 2% up next, moments away from an ecb decision. we will bring you that right here in new york. this is how the stage is set in the markets. futures positive across the board. equities gaining. moment, 122 .61. cable rate at the moment at

12263. rates look like this. -- of the euro at the moment 1.2261. the decision coming up and a couple of seconds. the qa program running at 80 million euros every single month. expect another extension. that may come in december. rates come through unchanged at zero. the deposit rates days at -40. stays at -- the deposit rate stays at -40. what that means for their tapering and how they wind up buying more bonds until then. david: last time, they said we would have committees look into

this and report back. will remain at present or lower levels, well past to we horizons. the matter what qe does, the committee saying we will keep those rates even potentially -.4%.in that -- and that jon: when do they actually extend it officially? caroline hyde joins us from frankfurt. no big surprises here. what's the first question for mr. draghi? is,line: the key question what about december? every economist we spoke to believes that's where the stimulus will come. what about the inflation target? all along, the semantics have been we will keep on going until inflation hits our overall forecast.

they don't feel that will hit until march of 2019. was economists think it will happen beyond mario draghi's term. december?happen in will you make it easier for your self in terms of what you are allowed to buy? the bank stocks have been reacting on the fact that they might make quantitative easing that much more easy. tantrum --the paper taper tantrum? much more from caroline after the news conference. we will bring you that in full -- in 43 minutes. joining us now is stephanie flanders. mr. draghi in focus once again.

what would be your first question? you have rightly said that economists look at inflation and say you are not yet on a path where you should be talking about tapering there's other reasons why they might want to change the way they are doing the bond purchases. they hate having low rates on the long end. financials from institutions about what that's doing to their long-term return. they have these technical problems that if they do carry on, they were run out of german bonds to buy. those problems of superlow long rates go away if you start to taper and say job done, the successes there. it's the catch 22. if they wind up changing how they buy bonds, you see yields

wind up backing up. they need more easing from the ecb. what's the way out of that circle? stephanie: the more conservative members of the governing council really don't like the idea that there's going to be this almost open-ended support for the markets, which they see also as tting governments off the hook. --cuts interest spending that's not considered to be a positive thing. is something i struggle to understand. two units in germany trading at -66 basis points. germany.ar notes in it has the same effect when you keep the front and pinned to the floor reasoningie: the same

that led the bank of japan to talk about targeting the level of yields. . we are not just talking about one's head of bonds. a set ofking governments. -- one set of bonds. we are heading in the direction of the national central banks having more clicks ability in the bonds they buy. -- more flexibility in the bonds they buy. will not cause this speculative race with a few bonds left that the ecb is able to buy. david: we talk about interest rates in that context -- should we talk about lower inflation for longer? , declare victory and retreat ?nd say we will not get to 2%

stephanie: he suggested the inflation rate would be at target by 2018. that would put it quite far away from 2%. i hope that doesn't mean they are lowering their targets and expectations for inflation because a region that has as much debt as the eurozone does and as much need to reflate after such a long time of low inflation should be looking at a higher inflation rate, not lower. with us.hanie flanders coming up on the program coming ecb watch. if you charge the central bank -- ae keeping an eye on few charts the central bank may be keeping an eye on. ♪

alix: this is "bloomberg the question for

mario draghi at 8:30, how does he continue his 80 billion euro tond buying program pas march of 2015 if they are running out of bonds to buy? ats is the deposit line -.4%. the ecb cannot buy anything below that. they cannot by any german bonds with a duration of less than seven years. says you remove this key, that will free up a lot of short-term bonds to buy. that is one option for mario draghi. the other option is to change the criteria of how you buy. the ecb buys on a q. based onan buy bonds how big the country is and how much they contribute to eu gdp.

this shows what that could do. the orange bars is what the ecb can buy per country based on the key and the blue bar is the debt key. that would help the peripheral nations which are the ones that need them the most. be? would the effect how long could you extend these programs if you implemented anyone of these measures? morgan stanley tried to crunch the numbers. if they just extend the maturity, it gets you nowhere. if they change the issue limit, it would increase the program by about six months. key, thatnge the debt would increase it to about three months and if you excluded germany altogether, that would extend the program by 11 months. come questions pivotal

8:30. most economists expect some changes to be made that bond buying program to extend and give it more legs. germany trading a -66 basis points. i don't see the market exerting a great amount of pressure on mario draghi to make a move today. david: let me take the time i need and why rush into this? jon: it may be difficult for him to say the governing council has not extended qe again -- discussed extending qe again. this is bloomberg. ♪

jonathan: good morning and

welcome to bloomberg daybreak. -- markets look like this futures are up across the board. equities are stable in europe. the trade is unchanged on the session as we count you down to president mario draghi's news conference. alix: the european central bank is leaving its quantitative easing program with interest rates unchanged. mariota druggie will talk about the future of his stimulus program at the ecb. teresa may attend sir first summit later today but it's not just brexit. the eu faces other challenges including the fallout of random populism and a migration crisis. the u.s. presidential candidates hillary clinton and donald trump faced off in her final debate and trump refused to say whether he would honor the election results of he was not declared

the winner. a new poll shows hillary clinton with a nine point lead. let's kick it off with the ecb. there is a news conference after leaving their quantitative easing program unchanged. the objective is how to navigate doing nothing without unsettling markets, how does he do that? the potentialout for quantitative easing as soon as december when the up eight the forecast for inflation and that's when the market expects and up they on quantitative easing, extending it past march. do not expect too much and that's why we are not seeing too much market change. make it easier to buy bonds and when will they hit their inflation target?

they are way off the 2% target and will they reach it by the and of his tenure which is sober 19? alix: how does he prepare the market for december? about explaining the tactics of quantitative easing going forward. it will be about how they keep buying 80 billion euros worth of bonds. he has said we will not stop until inflation is within target range but that means they will probably have to extend past march 17. he needs to tell us whether it they will buy bonds that are %?low the yield of -4 that will make a sharper yield curve going forward and that will start to give more profitability. be key question will

inflicting pain noticeably for german banks and noticeably deutsche bank and profitability is minimal because of negative rates. that yieldo get curve steeper. david: thank you so much. the ecb rate decision, we bring in the oppenheimer fund manager. it seems like you are back every time we talk about this. one thing that came out of the last press conference was that mariotadruggie -- druggie says they will not discuss what happens after march. he said they had not discussed it and he will have some committees look into how effective this has all been. what is he doing in that process? it's an interesting

observation. it does not necessarily imply that they discussed it, maybe it was more unofficial. a my opinion, we have not had prolonged. calm.od of the best ingredient of the bigger package they delivered was the corporate purchase program and the tltro and those things take a long time. what they might want to do -- duration extending the and say we can buy up to 80 billion euros. at the end of the day, it would become more sensitive about the shape of the curve, the level of the yield, and the level of real yield as inflation rises, even if yields stay where they are, you get lower real rates.

if our objective is to get real yield somewhere, why commit to a total amount of purchases? on any given month, we can buy less of it's not needed. marketn: sometimes the behaves like a petulant child. why does 80 million seem to matter so much? there might be some signaling issue that they are afraid of. tapering we reacted to which was a theoretical exercise , not really the announcement of tapering coming anytime soon. 80you say up to 80 alien -- alien, a petulant child will say that's it. about be massaged

controlling a price signal. alix: the other thing is what's happening with the euro. over the last few weeks, this is sinceollar and euro-pound brexit and the euro is up 16% being the dollar versus up only about 4% versus the pound. any kind of rally that you are seeing in the pound is overwhelming the euro and they are not making it up when it comes to dollars. that poses a big risk for mariota druggie, doesn't -- mario draghi, doesn't it questio? the change rate calculations are feeding into their forecast so the role of the wicking of the pound and the surge in the euro against the pound is negatively contributing to those dynamics.

put too i would not much emphasis on that right now because we know they always say exchange rate is transitory like oil. begin same time, we will to see positive contribution to inflation from oil. think about january-february, we are starting to use those $28-30 five dollars at the base that in a few months from now, it will trade useful year on year effects to lift headline inflation. these are more transitory but the problem remains on the growth side. europe cannot afford any headwind to any economic element of growth. bank lending is a problem. is notuggested there additional easing on the corporate side which we predicted. we said bankshares are suffering. typically, you see credit growth

slowdown after that. the bank lending services are suggesting some is happening. we know growth is not accelerating. if the u.k. is a big trading partner, demand may suffer. about brexitlk because that is coming up and as we look toward a hard rex it, how much of a headwind can that mariod how much does draghi have to take that into consideration? >> it remains an important headwind for the eurozone going back to the bank lending, confidence, long-term projections of business investment. it is an issue. when your credit growth is running at 1% or 2% at best, you don't have enough room to afford a slowdown in credit growth. you go into contraction quickly and that's the problem.

the export market does not seem to be the problem but the import situation is a domestic demand story. that goes back to confidence. people have to be confident and then the demand goes up. alix: the high yield issuances down. that tells you something about corporations not needing the morning -- money to spend. minutes, theout 20 ecb president will hold a news conference on the latest rate decision. in the meantime, let's get them update on what's making headlines outside the business world. donald trump has underscored his contention that

the presidential election is rigged against him. at the third and final presidential debate in las vegas, the republican candidate refused to say he would accept the election results if he loses. hillary clinton called the comment horrifying. the two squared off on a number of other issues including the economy. >> i'm going to create images jobs. from reallying gdp 1% which is what it is now and if she gets and it will be less than zero but we are bringing it from 1% up to 4% and i think we can get higher. i think you can go 5% or 6%. you don't have to bother asking your question because we have a tremendous machine. we will have created a tremendous economic machine once again. >>'s plan is to cut taxes and give the biggest tax breaks ever to the wealthy and corporations, adding $20 trillion to our debt and pausing the kind of

dislocation we have seen before. it truly will be trickle-down economics on steroids. the plan i have i think will actually produce greater opportunities and the plan he has will process jobs and lead to another great recession possibly. poll found that hillary clinton won the debate. in berlin, the leaders of germany and france hit vladimir putin with want language over the war in syria. he bears the responsibility for an inhumane onslaught. vladimir putin said he would isisbombing as long as forces are not active. theresa may will tell you you leaders they will be no turning back from brexit. there will be no second referendum on leaving the european union. she attends her first eu summit as prime minister today.

news, 24 hours a day, powered by more than 2600 journalists and in 120 countries. alix: equity futures in the u.s. are inching higher. we have walgreen and right aid per walgreen topping $1.07 share in the last quarter and saw growth and prescriptions as well as cost-cutting. it extend of the closing date for its $9 billion purchase of right aid by three months. nonetheless, it it seems to be on track. verizon is out with earnings as well. missed but there is a bigger miss in customers. they have a loss of about 1% of customers. the call will start in a few minutes and we will listen for any word on the purchase of yahoo! you've got select comforts which makes air mattresses and it moved down by 8%.

they lowered its full-year outlook. the ceo said shoppers were distracted by the election and the summer olympics. it's an interesting reason for not buying an air mattress, that stock down almost 20% of the david. david: 19 days away from election day and comments from donald trump says a could be longer before we are confident to the winner is. details next, this is bloomberg. ♪

"bloomberg

14 minutes away from a news conference by mariota drug he from the ecb. draghi from the ecb. will turn to las vegas and that dramatic debate between the two principal candidates for president last night. ofre was a fairmont substance addressed by hillary clinton and donald trump failed -- there was a fair amount of substance addressed by hillary clinton and donald trump. we had one of donald trump's main economic advisers and he laid out why he thinks donald trump will be progrowth. >> our jobs are being sucked out of our economy. you look at all of the places i just left, ohio, florida, any of them, go upstate new york, jobs have fled to mexico and other places. we are bringing her jobs back. >> one way you create jobs by

investing in people. jobs, investments in new investments in education, skill training, and the opportunities for people to get ahead and stay ahead. that's the kind of approach that will work. cutting taxes on the wealthy, we tried that and it has not worked. and wheregrowing around 1% and i think it's going down. our country is stagnant. we have lost her jobs, we have lost our businesses. >> we invest from the middle out in the ground up not the top down. that is not going to work. that is why what i put forward is not at a penny to the debt but it is the kind of approach that will enable more people to take those new jobs, higher-paying jobs. david: that was last night in las vegas. navarroar from peter the economic advisor to donald

trump. >> we have one candidate who want to do four things, cut taxes, reduce regulation, andinate the trade deficit, let our coal, oil, and natural gas industries produce for the american people and american businesses. we will agree that all four of those things point in the direction of growth. david: megan murphy is our washington bureau chief. we are trying to get to the substance. you were there and you know there was some. is it getting drowned out by donald trump saying he will not concede even if he loses the election? >> it's an important point to emphasize that all three debates one,d, this one was the particularly on the economy but also in other issues like immigration and gun policy and the supreme court come issues that will be defining the selection and they spent quite a bit of time fleshing out their policies.

in the soundbites we just heard, there was one thing we missed and that was donald trump saying the jobs report was so weak and one of the worst. showed how the inability of america to create job growth and that flies in the face of reason evidence of continued job growth and strength in the market. is a 4 point plan that he outlined focusing on energy and cutting taxes but the most popular part of donald trump's economic plan is that less regulation part. he says frequently when he goes to business leaders, it is that lessening of the burden of regulation that they are most attracted to. it's unfortunately something he is not spent much time on in the wake of what you call pyrotechnics. going to wine is this election at some point whether they agree or not. , if the go to govern

substance has been lost in all isthe emotion and nastiness, it more difficult to govern? you need to say this is my platform and what i ran on and now i get to do it. on hillary side, she has a sizable lead. indications point out that she will win this race with a sizable margin. how it breaks down in the senate and the house will be more difficult to call but will it be scorched earth in her ability to forge the relationships she needs to drive crucial elements of her plan for economic growth and whether that is tax reform which she has called for for years or expanding things like maternity leave, affordable childcare to get more women and drive that labor force participation rate among women higher. on the donald trump side, he will have to make his case as to where he is going with economic growth in his own party where people are leaving him in droves

against his message. david: thank you so much. of what thiss means for the market, how would the u.s. election impacted questio it? this chart shows you. there is a huge surge after the debate. joining us now is the man behind the chart, the deutsche bank managing director and chief u.s. strategist. a great way to measure how the markets are factoring in the election, what is in these baskets? >> they are 15 stocks we have selected to represent stocks we think would do well either under a clinton victory or at donald trump victory in the 15 we selected for clinton have been outperforming since the first debate. they have out performed the trump basket by over 300 basis

points. up trump basket is slightly versus the s&p 500. the clinton basket has outperformed. alix: it seems like energy and financials are in the basket. what is the argument for financials? >> there are some things that are typical with investors looking at the selection. inhave managed care stocks the clinton basket, the drug and device stocks. basket has been outperforming because oil prices have done well and we said oil prices would build more pressure under a donald trump victory because of more drilling in the united states and the yield curve has steepen. inflation expectations have climbed. if that has anything necessarily to do with hillary clinton clam in the polls but investors think that with a clinton win, you get less fat hikes and more tolerant of higher inflation.

the big takeaway of most newspapers is that donald trump may not accept the outcome of the election. what does that mean for me as a market artistic and? -- as a market participant? >> that's irrelevant. the president will be whoever wins the electoral college vote for alix. alix: we are worried about more volatility and uncertainty but what happens over the next 6-9 months? >> since the beginning, investors have looked at donald trump and said there are good things like less taxes and lower regulation but he is a wild card candidate. as he has slid in the polls, many investors have a more narrow set of outcomes and there is less tail risk but i believe the market is beginning to look at an environment of locked in

slow growth and perhaps a little bit higher inflation. not make much different to the market but other people are speculating about the house and the senate. how to the markets react to that? >> for the most part, investors expect clinton wins but they inect there to be moderation things like taxes. moderatedit will be by a well-balanced congress. and the house. it is looking like the senate is at risk to becoming democratic and investors are beginning to worry that there may be some fiscal drag next year. . jonathan: the next big event is when mariota druggie -- mario draghi holds press conference. is that developed in the last couple of months and how fundamental is a question mark >> and never seems to stop.

be brexit for the other challenges that europe i worry quite a bit about continental europe for the next few years. my colleagues at deutsche bank in europe expect qe to extend well through 2017 after march. i think there is more downside risk on the euro and that impacts s&p earnings. jonathan: we have had a rally in bank stocks. does bank equity continue to outperform? if there is an extension, that's kind of a head fake? risk -- that's the risk and we're not constructive on the european growth picture. troublesome given all

the support we have had and given the base level of growth being so low. it's difficult to see that escape velocity that would benefit the banks. arer performances dramatically impacted by capital requirements and the inability of addressing any problems. if you look at you as banks, earnings have come out over the last week and a half so how does that highlight the potential benefit for europe -- for u.s. banks compared to european banks? extremelystill has low rates for longer in the u.s. is making maybe one small further step toward interest rate normalization but we don't expect any sizable increases in u.s. interest rates. we believe the fed hike in december this year but not until june at the earliest of next year.

as the fed hikes, the yield curve flattens. when i look at banks, they still have a challenging earnings environment with more potential to raise there'd dividend payout ratios and that's a reason why we like big ranks and we had encouraging results in terms of the capital market businesses. i like banks because of the valuation, the dividend upside but the earnings power does not have a whole lot of upside rum here. mariota druggie -- mario draghi indicated he is not worried about what he's doing to the banks of his policy. >> i cannot imagine he believes that. all the latest rounds of innovation were trying to address the credit easing aspect of monetary policy, dressing the transmission mechanism of monetary policy.

i think that was more a comment about share prices. he was distancing himself from trying to control share prices. jonathan: what would be your first question if you are in the room with mariota druggie -- mario draghi? what would you do if he turned around and said we have not discussed an extension of the program? >> stay the course. jonathan: is that a buying opportunity? >> yes. we have the potential for a rerun of 20 with the federal reserve so what lessons does mario draghi need to learn? hawkish, don't talk to he will defeat the purpose of your near-term stimulus and don't point to your destination if you don't know. continues and that

will be more of it but what assets will they buy? they have lowered their standards. maybe they will look at things couldank loans and that be where they shore up low interest rates on earnings pressures but that can help repair the balance sheets of the banks of that bought some other assets the banks hold. alix: there is a concern the ecb would have to go down the risk scale. where would the distortions show up the most ? >> the more you go up the risk front tier, that's where you interfere more with the private sector. the boj showed the lead here. fix theortant to not horizon and not put yourself in a condition where every single tell market participants you here you are and your

inflation projections will not be mezzo give me more. start distancing yourself from all those constraints and the ecb has been good at putting on constraints on all the technical aspects of their policy but they are self-imposed and you can relax them. from the new grounds on monetary policy, the boj is probably showing the lead. jonathan: thank you very much. we await a news conference from president mario draghi. of today's decision, we go nowhere and roommates remain unchanged. the benchmark remains at 0%. the marginal lending facility remains at 0.25% 80 billion euros is the target every single month scheduled to end in march. that be extended and when

will the ecb inform the market of that happening? thatonsensus view is that will not happen today but maybe in december when we get new staff for the ecb. let's go to the press conference now. >> we are very pleased to welcome you to our press conference. we now report on the outcome of today's meeting of the governing council. monetaryour regular situations, we decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at lower levels for an extended period of time and well past the horizon of our purchases. monetary no standard policy measures, we confirm that the monthly asset purchases of 80 billion euros are intended to

run until the end of march, 2017 or beyond the necessary. council seeserning a sustained adjustment in the past two inflation consistent with its inflation aims. the information that has become available since our meeting in early september confirms a continued moderate but steady recovery of the euro area economy and a gradual rise in inflation. it's in line with their previous expectations. the euro area economy has continued to show resilience to the adverse effects of global economic and political uncertainty aided hightower comprehensive monetary policy measures which insure very favorable financing conditions for firms and households.

overall however, the baseline scenario remains subject to downside risks. looking ahead, we remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below but close to 2% over the medium-term. end, we will continue to using allranted by the instruments available within our toolbox. in december, the governing council's assessment will benefit from the new market throughons, extending 2019 and from the work of the

euro system committees on the theons to ensure implementation of purchase program until march, 2017 or beyond if necessary. let me now explain our assessment in greater detail. i will start with the economic analysis. real gdp in the euro area increased by 0.3% quarter over quarter. in the second quarter of this year, 0.5% was in the first quarter. the latest data and survey results point to continued growth in the third quarter of 2016 and around the same pace as the second quarter. expect further ahead, we the economic expansion to proceed at a moderate but steady pace.

domestic demand should be pass-through or monetary policy measures to the real economy. conditionsinancing and improvements in corporate profitability continue to promote a recovery in investments. moreover, relatively low oil prices and sustained employment gains which are also benefiting from past structural reforms, provide additional support for households, real disposable income, and private consumption. fiscal stancehe in the euro area will be broadly neutral in 2017. recoverythe economic in the euro area is expected to be dampened by the still some due to foreign divan. the necessary balance sheet

adjustment in a number of sectors and a sluggish pace of implementation of structural reforms. growthk to the euro area outlook remains tilted to the downside and relates to the external environment. of courting to euro staff, euro inflation inicp september of this year was 0.4%, up 0.2% in august. mainly aected continued increase in annual energy inflation while there are no signs yet of a convincing upward trend in underlying inflation. ofking ahead on the basis current oil futures prices, inflation rates are likely to pick up over the next couple of

months. this is in large part owing to the base effect in the annual rate of change of energy prices. supported by our monetary policy measures and the expected economic recovery, inflation rates should increase further in 2017 and 2018. turning to the monetary analysis, there is an increase at a robust pace in august, 2016. the annual rate of growth is standing at 5.1% after 4.9% in july. as in previous months, annual supported byinly the most liquid components with a narrow monetary aggregate and expanding at an annual rate of

eight .9% in august after 8.4% in july. dynamics follow the path of gradual recovery observed since the beginning of 2014. the annual rate of change of lows to financial corporations stood at 1.9% in august, 2016. the annual growth rate of loans to households also remains stable at 1.8% in august. although developments and bank theit continue to reflect relationship of the business cycle, credit risk and the of financialtment and nonfinancial sector balance sheets, the monetary policy measures in place since 2014 are significantly supporting lowering conditions for firms

and households and thereby credit flows across the euro area. euro area bank lending survey for the third quarter of 2016 indicates further improvements in both supply and demand conditions for loans to the nonfinancial private sector. furthermore, banks continue to asset that the ecb's purchase program and the negative deposit this elegy rate had contributed to more favorable terms and conditions on loans. -- the crosscheck of the outcome of the economic analysis with the signals coming from the monetary analysis confirm the need to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates toward levels that are below but close

to 2% without undue delay. is focused ony maintaining price stability over the medium-term and it's a common stance which supports economic activity will stop its emphasized repeatedly by the governing council. it happens about the european and international policy discussions in order to reap the full benefits from our monetary policy measures. other policy areas must contribute at the national and european levels. the implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. structural reforms are necessary in all euro area countries. the focus should be on actions

to raise productivity, improve the business environment, including the provision of inadequate public infrastructure which is vital to increase investment and boost job creation. enhancement of investment initiatives including the of our plan, progress on the capital markets union and reforms that will improve the resolution of nonperforming loans will also contribute positively to the subjective. -- to this objective. and this environment of accommodative monetary policy, the implementation of structural reforms will not only lead to higher sustainable economic growth in the area but will also make the euro area more resilient to global shocks. fiscal policies should also support economic recovery while

remaining in compliance with fiscal rules of the european union. full and consistent implementation of the stability over time and across countries -- tos crucial to implore ensure confidence in the fiscal framework. the same time, all countries should strive for a more growth friendly composition of fiscal policies. we are now at your disposal for questions. >> thank you very much. a clearer ideaus on whether inflation is on a sustained path towards price stability? some of your colleagues have said that perhaps we might want to see a period of overshooting?

what will you be looking at? my second question -- has there been a discussion today about a change in policy and specifically whether you might want to extend the qe program beyond march of next year? answer to the second question is no, there is no discussion. the answer to the first question, it's really nothing new. i myself and my colleagues have said several times that when we speak of convergence to our objective, this convergence has to be sustainable and durable. it should be self sustained. in other words, right now we are all aware that the monetary policy support in place is extraordinary. projectionsthat the

as far as our outlook will reflect financial conditions which reflect expect haitians that the support remains in place. conditions not only are the output of these expectations but also other factors like monetary policy more generally. they do reflect also the expectations of this extraordinary policy support will remain in place. it has tooes not mean stay in place forever. we want a is, no, convergence which is self sustained. thether words, without extraordinary policy support that's in place now. times, we said several that durable convergence means the subject to should be

andeved in a sustainable durable way. thatll look through blips are caused by other factors. i think i have said everything here. yeah>? >> you said in december you will benefit from reviewing the program. flavor ofgive us a certain preliminary reports on the work that has already arrived? maybe give us a general idea or an outline of what exactly the measures you could be looking at and what measures are definitely out of the question? my second question would be --

opinion,rally, in your what will provide the stimulus in the qe program? when you first designed the program, you give the market a clear idea of the size. the focus of the market seems to be shifting more to the monthly purchases. how will that shift impact your current view of the program in exiteventual desire to stimulus. >> the second part was not discussed. we took stock of the ongoing technical work in the committee's. designed tohat is

assure the execution of the program until march and beyond the necessary. we discussed various options but options that we consider in case we should be confronted with a shortage of purchasable bonds in some jurisdictions. the governing council rea formed purchases to support economies and returning to levels close to 2% over the medium-term. sometimes it's important to say what we did not discuss. we did not discussed tapering or the intended horizon of the asset purchase program. way, the governing council reaffirmed that it will

take into account the input of but the ecbes remains the ultimate decision-maker, thank you. >> you mentioned that tapering was not discussed today but do you expect it to be on the agenda six weeks from now? to stock and flow, you mentioned that your forecast reflects expect tatian's that the support you have provided remains in place -- reflects the expect haitians that the support you have provided remains in place. does that mean the purchases will remain the same? >> we had not discussed that. we have not really touched on that issue at all. listened to the

outcome of the committee's work and remanded the committees to continue working. as i said, the governing council will take this is one input, the committee's work but we remain the ultimate decision-maker. expectation -- what will be on the agenda for the december meeting we have not yet discussed. more generally, it's quite clear that our decisions in december will tell you what we will do in the coming months. monetary define the policy, i would say, environment for the coming weeks and the coming months. >> i know you say you did not

discussed the measures that might be taken to prolong qe. ofld you give a sense whether certain of them might be left more contentious or effective when that discussion takes place in terms of lying beneath the level now? is there a possibility there could be tapering but just an abrupt end to the monetary purchases? that was never discussed as a matter of fact. abrupt ending to bond purchases? i think it's unlikely. question, why are we waiting for december? we want to see all the input that is useful to have this discussion. important for having one

the governingch council members can express their opinion. right now, we have options. words, to be more at all ine did not go counting views and majorities. thank you my question is about negative rates. bankers have expressed concerns in the last days on the effect of negative rates on the lending of some banks. i wondered if you talked about that today with the governing council or if there is some out comes already on the effective negative rates?

>> we briefly touched upon negative rates or low rates more generally during the discussion we had about the current outflow. the conclusion was that they the transmission of our monetary policy. we have no evidence they hindered the transition of our monetary policy. workedes work, they have like they have worked another jurisdiction. s. we are not the first to have low rates. numbersive you some some of which you heard before. happenf all, what would if rates had not been what they have been? the numbers here are measures

taken from 2014-march, 2016 have generated additional inflation, --ulative in flesh and cumulative inflation of 1.4% and 1.3% of additional growth. the second point is you just look at the behavior of rate since then until now. they are dramatically lower across the spectrum. we have basically eliminated what was called the region nomination spread -- the re- denomination spread. we have eliminated fragmentation. on the recent bank lending demand we see net loan continued to increase for all loan categories.

the credit standards continue to ease for households and after nine months of continued easing, they were unchanged for financial corporations, companies. continuedconditions to ease although banks expect more tightening. corporate bond issuance increased markedly. that's the other significant number, the net issuance of bonds. it basically goes by our corporate bond purchase program. lending rates are now at an historical low. that is another point we want to remember. in the credit volumes have recovered since the beginning of in 2014 to3% growth

+ 2% growth. the growth is still subdued. he, --inues, it's that it's steady but it's moderate. there are other important pieces of evidence that come when we q3 when we see the largest contribution to the robust growth of m3 comes more and more from non-governmental sectors, namely households and firms. these are all pieces of evidence that our policy is being transmitted more effectively to the economy. thank you. in the bank lending survey,

it emerged that demand and italy and spain was falling in the third quarter. how do you explain the impact of your policy which is directed at it in credit loading them is being dealt unevenly in this respect across the eurozone? is there anything you can do to address that? which is ac of balinm new rule to sprint -- to spread losses of banks, to what extent iner markets ready for a ail in terms of a large institution? >> let me respond to the second question first. ailing rules are in place and they have enough flexibility that would allow to cope with the variety of possibilities.

reason to beny especially concerned. the commission has all the power to apply the rules and to interpret the rules according to existing legislation. don't see athat, i the present time any such possibility. question -- i would not make too much of the data point. it is only the first data we have seen after a long sequence of positive data. second, loan demand depends on many other factors other than monetary policy. what is the to see current economic situation concerning these two countries.

we look at the aggregate and in eurozone,ate of the it's what i outlined before. >> i have a question regarding the scarcity of safe assets. for example, distorting the repo market in europe. how concerned are you that this is happening? plansere any contingency for stress and that market? the second question is larger -- some people are arguing that what we are seeing currently is cert of an economic war between europe, germany, and the united states looking at the large fines and talk about apple, for example.

are we here in a political game or what do you see? the answer to the second question is no, we are not at least that's my perception. we are not in a political game. all parties and doing what they legislation, apply laws, apply rules. they are not acting because they are politically motivated. perceptionndividual and people may have different views. all ofression is not at a political war here. much of the discussion was about how to overcome scarcity is that

were to become a problem. it is not a problem now. it continues to run smoothly. the corporate bond problem has been a success so far beyond our expectations. so it is not a current issue, but just in case, most of the discussion was around that thing. >> thank you. marketshi, the bond have reacted quite strongly on couldport that the ecb wind down its bond purchases. were you surprised by the market's reaction or was it an code line with your expectations? my second question is that you

have stressed that there are still important risks and the forthcoming months. example, ecb, for still lower its interest rates if external risks materialized? thank you. >> thank you. answer to second question. we have not discussed anything like that. as i said, recently took stock of the committee's work and discussed the outlook, which has not changed much since the last time we met. on the first question, i have seen a market reaction. that is why is that the governing council is the ultimate decision-maker. we use input from the is one of, but that the inputs in the discussion, so that is why i said that.

was that expect that? it is very difficult to answer, but my expectation of a market kind of aollowing random statement made by someone who did not have any clue are any information about that -- thank you. about your question asset purchase program. if there were a downgrade of thatgal tomorrow, with provoke an immediate stop to your purchase of for two gives bonds? and can you report any news or progress on greece in the respective purchasing their bonds? my other question is about a recent statement by british

prime minister may, who said there are bad side effects from qe and very low interest rates. she pointed out that one of them is growing inequality. i wonder what your opinion is on that. hasalso said that a change got to come, and we are going to deliver it, which was read as an attack to central bank independence. are made innts other countries of the euro area for you to change your monetary policy, from policymakers and politicians. i wonder if you feel there is a growing feeling among politicians or a growing threat from politicians to central bank independence? >> thank you. no, i don't feel threatened, and neither is independence of the monetary policy governing

council. we certainlylity, have looked at that, and i think we have discussed that. the point is, and there is actually an interesting study by the bundesbank on monetary policy measures increasing equality, and the answer is, by in large, no. the reason is the main source of inequality is unemployment. to the extent than monetary policy is effective, it will reduce inequality. although, as you buy assets from people who are wealthy, in the short run, you certainly increase inequality. but when you look at this over the short run, the answer is no. that is what i would say. andasked me about portugal greece. bonds arertugal, the

currently eligible as the first withrating, triple b minus a stable output by this rating agency. so we know that if there is a , it is guaranteed the republic of portugal would become an eligible as collateral for monetary policy operations and for purchases. having said that, we should acknowledge the remarkable progress that has been chieftain portugal. of course, there are vulnerabilities that the government knows very well. the government is aware that reforms are needed. we can simply adjust from our

angle, there is one highlight come the corporate debt restructuring and addressing the problem of the npl, the nonperforming loans. so that is what it is. there arece, discussions about debt continuing. we have expressed, like others, like everybody else, concerns, and measures have to be undertaken to address the problem. the governing council, when the time will come, they will assess in an independent way the debt sustainability. premature tot is sort of speculate about purchasing bonds. thank you. >> mr. president, coming back to

the question raised from my colleague, asking if you were surprised by the market reaction after the bloomberg report. i want to ask how the ecb profited from this market reaction. for instance, the tightening of some rates on the long curve that maybe helped for permutation of qe. off thisthe ecb profit weeks before? second question, we have seen the hard lending has caused damages. it is not about the ecb sudden stop of qe. but you made a statement before, simply loaning out, a kind of sudden stop of the qe, and also,

you discussed at the time, but orat makes you so sure what makes this statement from you, because there is another bank of england that it experimented the sedin stopped of -- the sudden stop of purchase programs, so why the segway? thank you. >> thank you. the answer to the second question is that my perception is that the sudden stop is not in anybody's mind. it is not present in anybody's mind, not something people naturally contemplate. many reasons, and fairly obvious reasons, why this is so. on your first question, actually, i never thought that

we could profit out of sudden unauthorizedfrom and probably uninformed sources. i have no idea why the ecb profited out of that, but i can only reiterate that profit is not the reason why we run monetary policy. thank you. >> thank you. you have saids, that the extraordinary monetary policy support cannot stay in place forever. thatu have a feeling that market, participants and investors, are a little bit too complacent about qe being there

forever or for a very long period of time? would it make sense if they for hurray themselves for the end of qe? -- would it make sense of they prepare themselves for the end of qe? and what about longer-term inflation expectations? what is your assessment of the most recent development of inflation expectations on the financial market, because they have not really picked up although inflation is rising? thank you. >> thank you. i can only, as far as market expectations, i can only, in a sense, respond by pointing out to the fact that the current whichk in our scenario, gradually converges towards the is predicated on the

current financing conditions, which are accommodative because they are, themselves, based on the remaining in place, amongst other things, the extraordinary monetary policy support offered by the ecb monetary policy. and that is it. do i have a sense they are complacent or not? morenk this is part of the general category of financial stability risks. we certainly continue to monitor financial markets. so far, we have not seen evidence of bubbles, whereby a abble, by defining it as marked rising asset price a company -- accompanied by a

marked increase in leverage, so we monitor financial stability risks and have not seen any systemic bubbles of any kind. we have expressed several times the point that these bubbles ought to be coped with market prudential instruments. and i think that is it on this point. expectations, we have two sets of inflation expectations. survey base inflation expectations are market-based. survey base have been, by and large, more stable than market-based ones. long-term, 1.8, if i am not mistaken. and they have been quite stable all throughout this period. the market-based inflation expectations have been more volatile, as they are based on

financial instruments, and therefore, the market developments for these instruments do affect, in a sense, also the expectations. we have seen that in periods immediately before, and more markedly, after the british referendum, inflation expectations, by and large, across all horizons have declined quite significantly. but then now of more recent, they are recovering. also looking at that, it is part of our information set to though we have to be aware that certain , like pieces of evidence for example, the correlation between inflation expectations , inflationinflation

expectations and the oil price, have been themselves very volatile. so it is very difficult to really draw any stable inference from these correlations at the present time. thank you. mr. draghi, would you world out raising -- would you rule out raising interest rates while qe is still in place? >> let me read you the introductory statement. it is -- ok.

based on our regular economic and monetary analysis, we decided to keep the key ecb interest rates unchanged and caning you -- and continue to expect them to be at the present lower levels for an extended period of time. of not passed the horizon our net asset purchases. thank you. >> last question. >> president druggie, since the beginning of june, ecb has bought more than 660 covered bonds, according to bloomberg, among these companies glencore, novartis -- nine companies from switzerland that have nothing to do with the euro. why? the second question is, covered bonds with a triple berating now

hit -- with a triple b rating hit 0.23%. level.ch above junk-bond your bond buying program only reduces the refinancing costs for large caps. buying, you bond support big corporations and jeopardize the smaller and medium-sized ones. how can you justify this, mr. president? >> thank you. well, it is not true. as a matter of fact, both the corporate bond program and the covered bond program do benefit sme's, as well. they have increased the issuance by large corporate's, of course, but in so doing they free space in bank lending. so you can see actually that the

spread between loans to sme's and loans to large corporate's has declined quite considerably. thank you. i think we have exhausted the questions from this round. i think we are pressed for time anyway. so thank you very much. >> thank you. jon: that wraps up the ecb news conference in frankfurt, germany. no change in interest rates or qe. it is scheduled to go to march 2017, beyond if needed. it isg question is if needed. the takeaway is what they did not extend -- did not discuss, an extension of qe or the qe horizon at all. they did not discuss tapering. followset reaction as

-- begin with an intraday chart of the euro. initially, a little bit of a pop. then enrolled over again. bonds are off, with yields of about two basis points. looking at italian debt. funds guest has been with us throughout the conference. , what did they discuss? >> where we are, progress. a couple interesting points. growth, they still see downside risks. inflation, very important comment, a reminder to put the qe into context. evidenceno convincing that underlying inflation is on an upswing. that is the bottom line.

it goes back to the mission. the main take away is nothing at this stage he would we will wait for the forecast and projections . december is where we will discuss. jon: druggie wants to get to december. take what he said -- mario draghi wants to get to december. take what he said. as soon stimulus remains in place. we getic assumption is to december and they extend. it is how they extend it with it did discuss was the issue of scarcity. quite literally, the issue in december, how do they get around that? >> when they get to december, they might tweak the parameters on the asset purchases. you have a couple of options per you might do capital extremity or debt market sizing -- capital

ex germany or debt market sizing. one has to wonder, there is a extension,bout qe and wonder whether the next leg of policy reports will move mario draghi away from qe and go to the credit channel? maybe more news on the corporate side. one has to think creatively. we have learned from japan. we know there is as it scarcity. a permanent fix. alix: is there still asset scarcity when it comes to the corporate market? talking about issuance being up, but high-yield has not kept pace. is there also an issue in the corporate world? >> certainly. maybe he is not signaling anything precisely because they are really trying to think --

alix: they generally do not know . >> they genuinely do not know, and maybe they're looking for options. we know maybe this can buy you three to six months more, but i think they want to assess these policies. they suggest that policy is working. you mentioned how long gross and in the privaten sector, households, the corporate sector, reiterating things are working, working fine. transmission is happening more effectively. so i think you keep doing what you're doing and try to come up with new options to sustain and bump into these quarterly issues of bumping against the wall. david: has mario draghi found out a way to have his cake and eat it, too. we have reports to committees, and the present ideas about what we would do if we ran out of

bonds, what would happen. we saw them asked about a bloomberg report that led to that mini temperature and trim -- temper tantrum at the bond market when he was talking about signaling it he said we are working on it. >> about having his cake and eating it, too -- with the exception of the december meeting last year where there was mismanaged expectations, otherwise, throughout his entire tenure, he has proven to be the master of communication. to your point, he is really managing how to navigate through the cost-benefit analysis of any option and any statement. with the exception of that episode, he has done that remarkably well. jon: he has reclaimed the narrative, and that is what the objective was. he has come out of this without extending qe.

yields are unchanged and the euro is weaker. he will say, you know what, mission accomplished. we will see you and a couple of minutes. futures have been positive throughout much of the morning. we stay there at the moment. european equities pretty much unchanged. switch of the board quickly. onepproach a july low, -- ar from new york, this is bloomberg. ♪

jon: from new york city, this is "bloomberg daybreak." an ecb decision that does nothing, rates unchanged, qe unchanged. futures at the moment are a little bit softer as we approach the open, down about 28 points

on the dow. up by three points on the s&p 500. the nasdaq down by not even .1%. look at the board. the euro, a brief spike when the ecb president turned around and said we did not discuss the invention of the qe -- the extension of the qe process. they was a suggestion that did discuss options related to scarcity of bonds, maybe opening up the door to an extension in december. in the bond market, yields lower by a basis point. one .73% on the u.s. 10-year. the cash open is up next on -- from new york. this is bloomberg. ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. jon: from new york city, this is "bloomberg daybreak." futures down by about 31 points

on the dow. s&p 500 down by just over .1% after two days of gains. fx market looks like, very briefly a stronger euro. weaker on the session now. approaching a july low. you hear the bell ringing in new york. we grind down to 1.72% on the u.s. 10-year. let's go to alix steel. alix: we are snapping two days of gains for the s&p. off .1% or the dow off .2%. the nasdaq basically flat or slightly negative on the day. a 20% of s&p has reported earnings this quarter, and 82% have eaten estimates it we're shining that focus to the airline stocks. look at american airlines, slightly negative, down .3%. fall.e fell 2.2% for the it is the smallest decline so

far this year. american airlines -- less bad. live dons a jumping -- luke dons airline jumping over 7%. .hings getting better there in terms of the railroads, union pacific off by 3%. cargoes are jockeying -- dropping. about 6% to 8% for the last -- rest of the year. the lead story is the ecb's policy decision from earlier, the press conference just wrapping up a feel moments ago in mario draghi pretty much saying nothing, no taper discussed and no scarcity conversation with status get. now the focus is front and center to december. caroline hyde in frankfurt. it was a shortened press conference. they ran out of things to talk about at the end of the day, 45 minutes in. caroline: two days of talks

before the meeting at what were they talking about? they were not talking about whether they would extend quantitative easing. they were not talking about tapering. those were not on the agenda. that was forthright, coming from mario draghi you'd the only thing he said that was discussed was scarcity, the issue of buying bonds and how they do with the amount of german debt eligible to be bought. there is a significant selloff in the month of october that we have seen. it was surprising. you wondered what they were discovered -- discussing over two days. now it looks like december will be the month when more stimulus will come and when changes to quantitative easing is applied to her jon: thank you so much. let's bring in alessio de longis from oppenheimer funds. risk right now, little bit of

complacency. has theme the euro risk. the mann market -- the bond market is rather cap. do you see the risk? sense that this level of complacency, it seems to be look at the you underlying economic print. there is not really much going on. right? there is some divergence between the emerging markets. it is about keeping global growth at this ok moderate level and realize volatility is falling across the board, because you are not seeing many news spewed over the last two years, what was the biggest source of volatility? the big oil shock. on the way done, we re-sable iced. that is another big contributor -- on the way down, we

re-stabilized. be just an oko range. you dip lower, you have credit problems. you go to tie, you have consumer problems. this is a good environment. you have to watch for shocks along the way. there is always the issue of china, making sure there is no sudden leverage unwinding problem. but by and large, i would not call it complacency, but this is the type of investment environment where you are supposed to capitalize on low volatility by going for income strategies, and at the same time , because of the gross future, i would not go for earnings expansions or earnings growth, and risky assets. alix: the story of the last year was those oil prices. now the story seems to be the back up in the yield curves across the globe. is that the risk going forward,

shaking up the risk trade? >> definitely a few weeks ago, that was a sudden shock, new news we were dealing with. i think that is stabilizing, and policymakers have made clear that this is something they are watching and want to manage most of whether the doj says it exclusively or the ecb is managing that inclusive leak, but i think a substantial steepening of the yield curve would be a problem across all asset prices. so i would say you are right, that is one of the things you want to watch from the risk perspective. markets, i think you roller overome inflation, policy cuts, so that is most likely to be bullish steepening of the curve, not a bear steepening of the curve. ok, alessio de longis,

oppenheimer funds, thank you so much. alix: coming up, three weeks until election day it we will recap last night's debate and look for key things to watch in the days leading up to the election here at what will for thearty's win mean markets? that is next. this is bloomberg. ♪

"bloombergis daybreak." exclusive an conversation with bank of america's chairman and ceo, brian moynahan, 12:40 pm eastern. jonathan: from new york, we are eight or nine minutes into the

session. equities, a slight move to the downside. after two days of gains on the s&p 500, down by .17%. nasdaq down by almost 13 points. let's catch up with abigail doolittle. abigail: in line with the down open for the nasdaq, shares down sharply after company reported a third-quarter first margin volume that was light and is appointing fourth-quarter guidance, suggesting that the holiday season will be somewhat lackluster. investors have been waiting for a turnaround here for some time. the stock yesterday was up nearly 20% on the year, now only up about 6% to we do have some of the big banks, including jpmorgan, rbc, and cowan a bit cautious on ebay after that report. another loser, select comfort, shares trading lower after the company missed third-quarter .stimates the cut the full-year earnings per share of you i about 10%.

a bloomberg intelligence analyst saying this reflects slowing consumer spending. shares of select comfort now down about 16% on the year. that is one to watch to see whether a turnaround can come. david pok we will watch it. verizon fell short on subscriber growth in the third quarter, sending shares down nearly 3%, as rivals are able to steal users with cheaper plans. we're joined by a bloomer into -- a bloomberg intelligence telecom expert. they missed on subscriber growth, but there was a recent. >> the key measure for verizon is phone net additions are they came in at a number that was about half of what people were looking for. the main reason for that is t-mobile, sprint, and even at&t got into that game of competing particularly hard on price. it is coming out of verizon's high because they are playing at the high end.

if you seehing, their advertisements, is to compete on the network quality, not on pricing. so they do not have the subscriber growth they needed. >> no change in strategy. they did address it at the beginning of the call going on now, and they said when you to be greece these promotions, there is a two or three have an week impact on subscribers, and then it begins to fade. david: verizon had a small beat, above estimates on earning per share. $1.01 as opposed to 99 cents. >> it could be connected because they're doing better in the wireline division with fios. contract, new union cutting down costs, and all of that is flowing through to the bottom line and helping profitability. alix: i wanted is a what they were talking about on the call

in terms of potential m&a spirit still looking at yahoo!, in deals to buy the company. saying the m&a period is moving no more bignd sing acquisitions needed for the media business. in sort of does all the pie in yahoo!'s basket at the end of the day. david: exactly. there was the hacking scandal, but they really want yahoo! >> they really do want yahoo! and need yahoo! they want to gain skill in the digital advertising business and are very committed there. they have the app and other content as its they are trying to grow. what they really need is yahoo!'s programmatic arryrtising platform to m that was what aol and verizon already has. david: do they plan to make money off of the content or is

that an important to drive money in their other services, to stay with verizon? digital about advertising and getting a piece of that pie. that is a very strong growth market right now. wireless is not the core business flowing, so this is one of two new key initiatives. , thank you butler for being with us, bloomberg intelligence senior telecom analyst. now to cars. elon musk is on the road to a taunus. he plans to equip all new tesla cars with the hardware needed for full self driving capacity. jamies from detroit is butters, the bloomberg news transportation team leader. how big of an announcement is this, cameras and cars? >> going from one camera per car phasing out to now eight of them, including three facing forward and 360 degree view.

he says every car will have a supercomputer on board am able to make 40 trillion decisions per second, a pretty amazing thing. a course, shares are down little today because he is adding all this cost, this hardware and software, development expenses into these cars, and you cannot use the stuff. most of us are not allowed to let our guard to the driving for us and most of america are most of the world. alix: how do you pay for that? he trying to cut prices on the cars. >> we will see. what might happened is that there was a big push for model 3 when it was introduced, kind of promising this model 3 part 2, the hardware to be full autonomy if and when it becomes legal. maybe they get another rush of orders for the model 3 to help finance the development. we will see. when he said they were not -- that they might not need more

capital this quarter, presumably he already knew that he was undertaking this and adding these expenses. again, possibly a positive sign. the biggest problem model 3 getting more orders? can he make all those cars? and isn't he making it a little bit harder to make them? >> he is making it harder to make them, and it is putting more strain on the supply chain. they have had a lot of success working with nvidia. he is trying to retake leadership in this space. gm has already come out with a cheaper electric car, but they are not going to sell at the volumes he is aiming to sell if he can produce well. they are producing better than they were. they beat targets for the third quarter. some things could be going right. they are trying to develop the digital track record to say that these of the lives that could be saved if you would let the cars do the driving.

because 80% or 90% of the 35,000 40,000 americans killed on roads every year, it is their own fault. so these are better robots, less animals that fall asleep or getting distracted by texting or worse, we would avoid a lot of these deaths. but we don't, so that is what they are trying to offer. alix: is tesla a car company or a tech company? does elon need to decide? >> we will see. it had been that tesla was the play for electric cars. tesla was the only one only doing electric. now you can add solar city. it becomes messier, more of a pure play on clean energy and lifestyle of the future, which is maybe less of a play, more just a play. but you are buying into elon

musk and his vision, which is solar power, home generation, power your car without polluting the environment. david pug great to have you with us, jamie butters joining us from detroit. jonathan: coming up, recapping the ecb. >> cannot wait. we have eric nielsen. we will talk about the bond buying program indicating further stimulus is likely after the current program ends in march. yields are lower. euro lower since march. stocks off their lows of the day. investors seem to be thinking that it will happen in december. annnd, and walsh, -- wallace from guggenheim. she runs $3.9 billion under management. fascinating to hear with she

hears about draghi's comments today and what is likely in december. and we will be discussing the tools of the too gloomy, early, or too often. jonathan: looking forward to it. alix: coming up, sparks flew in las vegas last i between hillary clinton and donald trump. ominous comments about the outcome of the election. 19 days to go. this is bloomberg. ♪

alix: this is "bloomberg daybreak." some key events coming today. latest existing home sales number is at the top of the hour. after the bell, earnings, microsoft and schlumberger reporting or tonight, clinton and trump up will attend a charity dinner in new york, the last time they will appear

together before the election on november 8. they will be one chair away from each other. are they going to shake hands, kiss and make up? i will be watching. alix: that may be extreme. david poppa over night -- only -- david: only 19 days until the election. there was a debate last night with little substance and name-calling. talked about tax policies. mr. trump: i am cutting taxes per we are going to grow the economy. it is going to grow at a record rate. it is going to totally help you. one thing we have to do, repeal and replace the disaster known as a obamacare. it is destroying our country, our businesses, our small business and big is mrs.. we have to repeal and replace obamacare. >> will you consider a grand bargain, a deal, that includes both tax increases and benefit cuts to try to save those

programs? mrs. clinton: i am on record of saying we need to put more money in the social security trust fund. that is part of my commitment to raise taxes on the wealthy. my social security payroll contribution will go up, as will donald's, assuming he cannot figure out how to get out of it. but what we want to do is replenish -- mr. trump: just a nasty woman. david pug we're joined by mike mckee. political says hillary clinton will not -- is. -- would not do taxes. mike: what chris wallace was asking about was social security in the long run and about entitlements. difference, think long run versus short run. short run, donald trump would cut taxes massively. most of the benefits would go to the wealthy, but it would

stimulate the economy. you would have a lot more jobs created and more gdp. cost the it would economy because deficits would explode and go as high as an extra $5 trillion and you would lose jobs long run. hillary clinton, short run, her gdp is a few jobs, little changed, but over the long run, adds to the economy. and you have to add in how you feel about the deficit and is aer or not you think it crowd out jump to the long run. credit tog chris wallace for pushing this. mike: do we need to worry about this right now? it is a longer-term problem. a lot depends on how fast the economy grows. if it grows faster, there are more social security receipts. if focused on growing the

economy, you can and more. just raising social security taxes will not be the answer to the problem. people at the lower end can afford significantly -- cannot afford significantly higher social security taxes, so you will just benefits or adjust the retirement age. neither really addressed that. has not been a lot of substance in the debates, so neither candidate has been able to get their message out there. do you feel the policies of the two candidates were clear and precise to the american public last night? mike: i do not think so. hillary clinton sort of gave the same longer list of things to do, so it is hard to figure out exactly how it will affect people. i amd trump stuck with going to cut taxes and grow this marvelous economy without explaining. emphatic he will create jobs and not by having more government, unlike hillary clinton. her responses we will have a lot

of programs in the government. >> it comes back to the level of growth and whether you can push growth up to create more jobs. we have seen a lot of analysis that trump's trade policies would cost jobs rather than create jobs. which one will create more jobs? there are a lot of things neither one of them have control over. alix: it is interesting that donald trump said last month's jobs report was terrible, awful, 156,000 jobs. so where are we in terms of full employment? mike: i do not think there is an economist that would agree it was a terrible report. it was an ok report, significantly better than the level needed. the implement rate went up -- the unemployment rate went up to it we saw people come into the labor force and look for work. it was not the kind of report we have been seeing of 200,000 plus jobs, but it was still a

reasonably good number. so that part, not correct. jonathan: you say he needs to watch payrolls friday. >mike: payrolls friday. that will be interesting. if there is a real outlier, maybe that will give somebody to talk about. jonathan: mike mckee. 26 minutes into the session, down about .1% on the s&p 500. european equity on the front. euro session, lowest since march 2016. $1.0953. that is it from us. bloomberg markets is up next. this is bloomberg. ♪

>> and if 10:00 in new york, 3:00 and london, and 3:00 a.m. in hong kong. mark: welcome to bloomberg markets.

♪ vonnie: thinking you from las vegas, roman, and the united kingdom. first, breaking data on the economy. -- taking you from las vegas to the united kingdom. 5.47: five point4 -- million. this means a month over month , 3.2%. this is in the column of the more positive earnings report, housing reports that we have gotten recently. .ontract closing 5.7 million sales of 2.8% year over year